1. This is an appeal from the judgment of the learned Subordinate Judge of Cuddalore dismissing the plaintiff's suit. It was brought for the recovery of a sum of Rs. 10,848-4-7 being the amount of kist paid by the plaintiff in respect of the properties mentioned in Schedule B to the plaint for faslis 1333 to 1335 (1924 to 1926). The plaint was filed on 1st April, 1936 and on 13th October, 1937, he withdrew his claim in respect of fasli 1333 on the ground that it had been adjusted in O.S. No. 4 of 1933 on the file of the same Court and confined his claim only to faslis 1334 to 1335. The circumstances under which the plaintiff had to pay the said kists are set out by him as follows. The properties belonged to one Thangasami Pillai who executed a will on 6th July, 1915, bequeathing them to his daughter the defendant who was then a minor and appointing Sundarathachi his mother and the grandmother of the defendant to be her guardian to manage the property during her minority; in the course of the said management, the said grandmother leased the property to the plaintiff for a term of three years at a fixed rent to be paid by him and one of the stipulations in the lease deed was that Sundarathachi should pay the kist on the property, but as she failed to pay the same, the plaintiff was obliged to pay the same in order to preserve the produce raised on it. The contention of the defendant was that the said lease was a fraudulent transaction brought about by Sundarathachi with a view to defeat the claim of the defendant, that the said payments were voluntary and not made bona fide and therefore not recoverable. It was further pleaded that the defendant filed O.S. No. 6 of 1927 on the file of the District Court of South Arcot against Sundarathachi and various alienees from her to set aside the several alienations including the lease in favour of the plaintiff who was the fourth defendant in that suit, that the lease was set aside as a fraudulent transaction, that mesne profits for faslis 1334 and 1335 were decreed against him and that the plaintiff ought to have asked for the said payments being taken into account in assessing the mesne profits and as he failed to do so, he was debarred from claiming the said amount by an independent action and further the said payments must be deemed to have been taken into account and therefore the plaintiff was precluded from recovering them on the ground of res judicata. The learned Subordinate Judge on the evidence held that the plaintiff did make the payments of kist for fasli 1334 and 1335 but in view of the finding in the prior litigation, O.S. No. 6 of 1927, that the lease was a fraudulent transaction he held that the plaintiff could not be said to have made the payments bona fide and therefore could not claim the reimbursement of the kists paid as payments made on defendants' behalf either under Section 69 or Section 70 of the Contract Act. On the question of res judicata he held that the defendant's claim for kist was by way of a set off and that an independent suit was not therefore barred but held that the claim was adjudicated upon in the prior suit and therefore the suit was barred on the ground of res judicata. The learned Judge also held that if it be held that the plaintiff is entitled to the relief claimed, he would be entitled to a charge on the suit lands. On these findings the learned Judge dismissed the suit and it is against this decision this appeal has been preferred by the plaintiff.
2. Mr. Sitarama Rao on his behalf has canvassed all the findings of the lower Court. It seems to us that if the plaintiff's claim had merely rested on the fact of the lease in his favour, it may be that the decision of the lower Court would be correct. But the plaintiff's claim does not rest on the mere fact of his having been a lessee, at any rate in regard to a portion of his claim. The previous suit was filed in the Sub-Court of Cuddalore as O.S. No. 11 of 1925--this was subsequently transferred to the District Court of Cuddalore and registered as O.S. No. 6 of 1927--and on the same day an application for the appointment of a Receiver was made in the Sub-Court. On 19th March, 1925, the plaintiff who was the fourth defendant in that suit filed a counter affidavit opposing the application. There was apparently some sort of an informal understanding between the parties the result of which was that the present plaintiff filed an affidavit undertaking that he would lease out the properties described in the lease deed by means of documents for cultivation during the faslis 1335 and file them in Court, that he would lease them out on a certain rate of rent, that if the leases were to be given for a rent lower than that rate, he would take the directions of the Court and abide by its orders and that he would submit a monthly return to the Court of the collections made by him and also the expenses incurred in respect thereof. On this the learned Judge passed the following order:
in view of the undertaking contained in the affidavit of defendant 4 the appointment of a Receiver is not necessary. Defendant 4 will strictly act according to the terms of the undertaking.
It will thus be seen that though there was no formal appointment of a Receiver, the present plaintiff undertook to administer the property under the directions of the Court and he was permitted to be in possession in pursuance of the order made by the Court and he was thus in possession till he was actually divested of it in 1927. It is conceded before us that during the period he was in possession in pursuance of the undertaking given by him he paid Rs. 2,155-8-7. It was in respect of this amount that Mr. Sitarama Rao pressed the claim on behalf of the appellant. The question for decision is whether his claim in regard to this amount should not be sustained. It was frankly conceded by Mr. Venkatarama Sastri on behalf of the defendant that though the plaintiff might be considered as a trespasser by reason of the fact that the transaction of lease was set aside as fraudulent, he would have been entitled to the payments made by him towards the kist if he had set up his claim by way of reduction of damages in O.S. No. 6 of 1927 when the mesne profits in respect of fasli 1335 were assessed and decreed against him but he having omitted to do so, it is not open to him now to maintain an independent action. His contention is that in a claim for mesne profits it was incumbent upon the defendant to have set up this claim as and by way of reduction of damages and that that is the only course open to him. In support of his contention he relied upon the decision in Tiluck Chand v. Soudamini Dasi (1878) I.L.R. 4 Cal. 566, and on a passage in Mayne at page 436 based on Doe v. Hare (1833) 2 C. & M. 145 : 149 E.R. 709. In Tiluck Chand v. Soudamini Dasi (1878) I.L.R. 4 Cal. 566, a question arose between two rival purchasers in execution of different decrees against the same judgment-debtor as to whose sale should prevail. One of the purchasers instituted a suit for a declaration that his sale is valid and after getting the said declaration filed a suit for recovery of mesne profits for the period he was not able to get possession of from the other purchaser. That suit was not only dismissed, but a decree in favour of the defendant for the difference between the rents received and the revenue paid for the property during the three years was given. This decree was reversed on appeal by the High Court on the ground that though payments of revenue might be used to reduce the mesne profits, they could not be treated as a substantive set off. Then a suit was filed for recovery of the amount that was awarded in the other suit and the question was whether the action was maintainable. The learned Judges took the view that it was not. Garth, C. J., who delivered the judgment observed thus:
In a suit for mesne profits, the plaintiff is only entitled to recover the actual loss which he has sustained by being kept out of possession; and therefore, in ascertaining the amount of such loss, it is right to take into consideration the receipts on the one hand and the necessary payments on the other. But it does not follow from this that if a man has wrongfully taken possession of property, and held it adversely to the true owner, and has been a loser in consequence, he has right to recoup himself for his losses as against the true owner. He must be content in such case to bear the burden of his own wrong.
3. The correctness of these observations came into question in a case reported in Dakhina Mohan Roy v. Saroda Mohan Roy (1893) L.R. 20 I.A. 160 : I.L.R. 21 Cal. 142 (P.C), which went up to the Privy Council. The question there was whether a person who was in possession of an estate in pursuance of a decree of Court but ultimately reversed on appeal was entitled to recover the amount paid for Government revenues during the period he was in possession. The Subordinate Judge decreed the plaintiff's suit but on appeal the decree was reversed by the High Court and the learned Judges remarked as follows:
A person who is in wrongful possession is not entitled to recover sums paid on account of outgoings, although he may be able to use them for the purpose of reducing the mesne profits. This proposition is clear from Tiluck Chand v. Soudamini Dasi (1878) I.L.R. 4 Cal. 566.
Lord Macnaghten pointed out that the possession of the purchaser in that case could not be held to be wrongful possession and that he was not prepared to give assent to the proposition as laid down in Tiluck Chand v. Soudamini Dasi (1878) I.L.R. 4 CaL 566, He remarked as follows:
Even if the rule stated by the learned Judges admitted of no exception--a proposition which it would be difficult to maintain, having regard to the recent case of the Peruvian Guano Co. v. Dreyfus Bros & Co (1892) App. Cases 166, in the House of Lords--it seems to be a somewhat strong thing to hold that the appellant when he paid the Government revenue was in wrongful possession of the estate. He was in rightful possession at the time. He was in possession under the authority of the Highest Court in India.
He then pointed out that the Government revenue was a paramount charge on the land and that if default was made in payment, the estate would be sold in a summary way and later enunciated the principle applicable to the case thus:
It seems to their Lordships to be common justice that when a proprietor in good faith pending litigation makes the necessary payments for the preservation of the estate in dispute, and the estate is afterwards adjudged to his opponent, he should be recouped what he has so paid by the person who ultimately benefits by the payment, if he has failed through no fault of his own to reimburse himself out of the rents.
4. He further observed that the claim was in the nature of salvage and that the law relating to sales for arrears of Government revenue recognised an equity to repayment in the case of a person who not being proprietor paid the Government revenue in good faith to protect a claim which afterwards turned out to be unfounded. It is clear from this judgment that the case of Government revenue would stand on quite a different footing from other outgoings incurred by a person in possession of an estate without title and that it would be open to such a person to maintain an action for the recovery of the amount paid. It may also be open to him to set off the amount in a suit for damages, and what could be set off could always be claimed in an independent action and the fact that a set off was not claimed against a demand in a prior action would not preclude the claim being agitated in an independent action. This proposition is not disputed by Mr. T.R. Venkatarama Sastri. In this case there can be no doubt that from the date of the order by which the plaintiff was allowed to be in possession in pursuance of the undertaking given to the Court he must be held to be in rightful possession of the estate and must be held entitled to recover any payments made by him for Government revenue to preserve the estate which he was bound to pay according to the terms of the undertaking. This claim would therefore be directly covered by the principle of the said Privy Council decision and we therefore hold that the suit is maintainable. The cases relied on by Mr. Venkatarama Sastri, viz., Kachar Ala Chela v. Sha Oghadbhai Thakarshi (1892) I.L.R. 17 Bom. 35, and Rai Kiran Chandra Rai Bahadur v. Erf an Karikar (1933) 38 C.W.N. 384, are all cases where the claim was set up and reduction allowed but they did not decide that if the claim was set up the action was barred. So far as the amount of Rs. 2,155-8-7 paid since the date of the order is concerned, the plaintiff will be held entitled to recover. Mr. Sitarama Rao after some argument has confined his claim to this amount in view of the finding that his client was held not to be a bona fide lessee of the estate, a finding which he was unable to challenge; we therefore think it unnecessary to go into the exact scope of the decision in Tiluck Chand v. Soudamini Dasi (1878) I.L.R. 4 Cal. 566, in regard to the earlier payments.
5. Another point was raised on behalf of the respondent that the claim must actually be deemed to have been negatived by the Court in the prior litigation in O.S. No. 6 of 1927. From the written statement in that case it is clear that the plaintiff did not plead that he was entitled to a deduction from the amount of mesne profits to be ascertained, the payments towards kist which he had made up to that date. No doubt in the evidence he stated that he paid certain amounts as receiver but his deposition was ultimately rejected on the ground that he did not submit himself to cross-examination and the learned District Judge who tried the case did not go into the said question at all. Though a memorandum of grounds was taken that there must be deduction on this head, it does not appear to have been considered by the High Court apparently because the claim was not pleaded. It could not be said that the Court had expressly or impliedly overruled the claim of the defendant in regard to the payment of kist. We therefore overrule the contention of the respondent on this point.
6. In the result we set aside the decree of the lower Court, and pass a decree for the said amount with interest at 6 per cent, per annum from the various dates of payment. So far as the rest of the claims are concerned, they are dismissed. Each party will bear his own costs in this appeal but so far as the lower Court is concerned, the plaintiff will get his costs on the amount allowed here. An application has been filed by the defendant respondent under the Madras Act IV of 1938. This petition will be forwarded to the lower Court for adjudication on the merits. The decree passed herein will be subject to the relief the defendant might get in the said petition. The plaintiff will have leave to file a counter-affidavit.
7. This appeal having been set down to be mentioned this day the Court made the following
8. The plaintiff will have a charge for the amount decreed on the suit properties.